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The effects of the drought on south African agriculture

The effects of the drought on south African agriculture

South Africa is battling one of the worst droughts ever recorded that already started in early 2015. Since 1904, rainfall in all nine provinces has averaged 608mm per annum, while in 2015 South Africa received an average of only 403mm (66% of the annual average). Previously the lowest rainfall received in a year was in 1945, when the country received 437mm (72%). The forecast for 2017 looks even more grim, especially for the agricultural sector.

The Western Cape has a very important part to play in the agri-economy in South Africa. Water levels remain low, so crops must be managed carefully to get it through to harvest.

Why do we need rain?

The Western Cape is probably one of the most important provinces in regard to export of agricultural products. The deciduous fruit industry, table grapes, citrus, wine and vegetable is setting base in the western cape, which is key export produce that contribute significantly to the economy.

Water shortage is not the only impacting component in the agricultural sector. The heat and the strong winds will also have an impact on the cosmetic appearance of the product, which will impact the marketability of the product and then the price.

The environmental factors will also have an impact on meat and cash crops(vegetables). Water will be held for long-term crops because it brings in more income, so vegetable will not be planted. In short term we will see shortages of vegetable, consumers need to be concerned about supply price and the situation will worsen towards the end of the year.
The strengthening of the rand against major currencies over the past few months may also have added to the pressure on export prices.

What is the impact on GDP contribution?

The Western Cape contributes 24% to the total GDP in South Africa. Agriculture has a contribution to the GDP of the Western Cape of approximately 4%. The significance is that agriculture and agro-processing is responsible for 18% of employment in the province. The drought will have the biggest impact on seasonal employment in the deciduous fruit industry. Due to possible lower production, less seasonal workers might be employed, with obvious consequences.

Coming as it did after an already below average production season, the combination of the drought and the weaker exchange rate has already impacted severely on the agricultural commodity prices. Furthermore, reduced production volumes will impact on South Africa trade balance. The assumption is, sectors that would normally contribute to a positive trade balance, will shift to a negative trade balance.

What is the long-impact of the drought?

Although agriculture only makes up 4% of the sector when compared to other industries, most of agriculture production, in access of 70%, gets used by the manufacturing industry, the Western Cape is a key contributor to this. So in turn, the whole value chain will suffer.



Fig. 1 Weight of products in the basket which will be affected by the drought

A BLOOMING BUSINESS

A BLOOMING BUSINESS

Through the launch of Verso Agri Consult earlier this year, Verso pro-actively expanded into the agricultural development sector to contribute to the innovative initiatives in farming and by-product expansion.

Food sources have become one of the most important issues of our time. The World Bank has estimated that the agri-business market in Africa will reach $1 trillion (being three times the current market) by 2030. New technologies in the agricultural sector are paving the way for innovative solutions to the environmental challenges faced.

The core purpose of Verso Agri Consult is to identify new farming techniques that will be sustainable in today’s changing environment. The approach of the Verso Agri Consult team is to assist farmers in the Southern African region to adapt their crops to suit  the changing environment.

Verso Agri Consult managing director, Jorrie Mulder, understands the issues farmers are faced with, and is implementing novel practices to assist farmers. “Climate change is affecting many areas of farming and as such all crop types are being affected.“ We cannot use the same approach as we have done in the past because the conditions simply are no longer the same,” explains Jorrie.

Jorrie has more than 15 years’ experience working with various types of produce and has seen first-hand the major problems faced by South African farmers. This is what has led him to develop new solutions for tackling these concerns. “The company is solution driven, so when a client comes to us our main focus is to find the best possible solution for their business” adds Jorrie.

Verso Agri Consult services clients across the industry. This includes sourcing produce for supermarket retailers, assisting farmers to plan and to setup new crops (be they small or large). The company is also lending its input to the rapidly expanding business of by-product development, which extends the use of produce to creating oils, creams and environmental household products.

– by Wouter Hugo

If you would like to find out more on Verso Agri Consult and the services they offer, you can do so by visiting our website. To contact our agricultural consulting team, click here.

For cited sources, click here.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)